THE HALAL FOOD INDUSTRY IN OIC MEMBER COUNTRIES Challenges and - PowerPoint PPT Presentation

THE HALAL FOOD INDUSTRY IN OIC MEMBER COUNTRIES Challenges and Opportunities Mazhar Hussain Senior Researcher OIC Stakeholders Forum on Halal Food Standards and Procedures 9-10 December 2015

Outline  Growing Interest in Halal  Key Markets, Key Facts  Enhancing Cooperation in Halal Food among OIC Countries  Halal Food Standards and Certification  Halal Food Authentication  The Potential of Islamic Finance for Halal Industry  Challenges and Opportunities  Recommendations and Outlook

Background: Interest in Halal 100 …Influx of events such as Web Search Interest: Halal 90 national halal initiatives, 80 Index conferences, expos, online 70 networking and media Source: Google Insights for Search 60 50 40 30 20 10 0 100 90 The storm started brewing in South 80 East Asia 70 60 Non-Muslim countries with an 50 established minor Muslim 40 population, such as United 30 Kingdom, France and Australia, are 20 10 emerging as new markets for halal 0 products. 3

Key Facts Global Halal 0 500 1000 1500 2000 Market USD, billion Finance 1814 Food 1128 Source: State of Global Islamic Economy Report 2015 Travel 142 Cosmetics Pharmaceuticals 2% 2% Media 5% Fashion 230 Fashion 6% Travel Media 179 4% Pharmaceuticals 75 Finance 50% Cosmetics 54 Food 31% Global Halal market is estimated at US$ 3622 billion annually in 2014 4

Key Markets, Key Facts Muslim Muslim Muslim Key Halal Muslim pop. pop. Muslim pop. Muslim pop. (% of (% of Muslim pop. (% of Markets pop. (%) OIC) World) pop. (%) World) Indonesia 205 88.1 15.8 12.6 India 177.3 14.6 10.9 Muslim population, million Pakistan 178 96.4 13.7 11.0 Ethiopia 28.7 33.8 1.8 Source: Pew Report Bangladesh 149 90.4 11.5 9.2 China 23.3 1.8 1.4 Egypt 80 94.7 6.2 4.9 Russia 16.4 11.7 1.0 Nigeria 76 47.9 5.8 4.7 Tanzania 13.5 29.9 0.8 Iran 75 99.7 5.8 4.6 Philippines 4.7 5.1 0.3 Turkey 75 98.6 5.8 4.6 Germany 4.7 7.5 0.3 Algeria 35 98.2 2.7 2.1 Thailand 4.1 5.0 0.3  The Muslim population is Morocco 32 99.9 2.5 2.0 Ghana 4.0 5.8 0.2 approaching 2 billion and is Iraq 31 98.9 2.4 1.9 France 3.9 16.1 0.2 Sudan 31 71.4 2.4 1.9 Kenya 2.9 4.6 0.2 expected to account for 30% of the Afghanistan 29 99.8 2.2 1.8 United States 2.9 7.0 0.2 world's population by 2030 Uzbekistan 27 96.5 2.1 1.7 Saudi Arabia 25 97.1 2.0 1.6 Yemen 24 99.0 1.9 1.5 Syria 21 92.8 1.6 1.3 Malaysia 17 61.4 1.3 1.1 Niger 16 98.3 1.2 1.0 Non-OIC OIC Countries 1297 81.8 100.0 80.1 322.0 7.9 19.9 Countries  Estimated world Muslim population: 1.7 billion  OIC countries with a total Muslim 90-100 % population of 1.3 billion account 75-90% 50-75% for the 80.1 per cent of the world 25-50% total Muslim population 5-25% 1-5% 0-1% 5

Key Markets, Key Facts (cont.) 1200 1128 Global Muslim Food & Beverage 1000 Expenditure 798 741 800 compared to Top F&B Markets, 2014 600 USD billion 947 367 400 336 238 200 Source: State of Global Islamic Economy 0 Report 2015 Global Muslim China USA Japan India Brazil Food Market  Halal food makes up around two-thirds of the global market for halal products and 17% of the global food industry  The market for Muslim food & beverage products is estimated at US$ 1228 billion annually in 2014….OIC countrıes roughly accounting for 77%  The projected demand for halal food & beverage is US$ 1,585 billion for 2020, corresponding to a Compound Annual Growth Rate (CAGR) of about 5.8%. 6

Key Markets, Key Facts (cont.) Americas and Australia Europe 1,7% 7,8% Share (%) of Total Muslim MENA-GCC Food Expenditure by 7,8% Region Percent Sub-Saharan Africa Asia 11,0% 49,9% MENA-Other 21,8% Source: State of Global Islamic Economy Report 2014  The growth in Asia has been driven by changing lifestyles that allow for higher incomes. The GCC countries have higher incomes and consequently higher per capita rates on consumption. The growth in the halal food industry is unlikely to be curbed in the near future.  Countries in North Africa region are not only import-dependent for food, but consumers are predominantly Muslim with rising per capita incomes. With Muslims making up almost one- third of the population, the halal food industry in Sub-Saharan Africa is expected to see continuous growth in the upcoming years  With a total share of 9.5% in halal food Europe, Americas and Australia are presenting huge demand for high quality, healthy and safe products. 7

Key Markets, Key Facts (cont.) Top Countries 180 157,6 by Volume of 160 Muslim Food 140 Consumption 109,7 120 100,5 Market, 2014 100 USD billion 75,5 80 62 58,9 60 44,1 39,4 35,4 34,2 40 20 0 Source: State of Global Islamic Economy Report 2015  Top-10 markets account for 58% of total halal food consumption in 2014  8 OIC countries are ranked among the top-10 markets…among these.. three countries; Indonesia, Turkey and Pakistan account for 30% of total halal food consumption 8

Key Markets, Key Facts (cont.) 0 10 20 30 40 50 60 70 80 90 Top Countries by Halal Food Malaysia 78 Indicator, 2014 Pakistan 56 UAE 53 Australia 51 Oman 49 Brazil 45 Jordan 44 Azerbaijan 43 Source: State of Global Islamic Egypt 41 Economy Report 2015 Qatar 41 Halal Food Indıcator (HFI) evaluate countries’ health and development of their Halal Food ecosystem. The indicator does not focus on the overall size and growth trajectory of a country in the Halal Food sector; instead it evaluates them on relative strengths of the ecosystem they have for the development of the sector. 1. Trade (OIC Food Trade Relative to its size) 2. Governance (Regulation/Certification requirements) 3. Awareness (Media/Events) 4. Social (Food Price Index) 9

Key Markets, Key Facts (cont.) • .. strong consumer base of over • …Influx of events such as 1.7 billion Muslims…expected to Population national halal initiatives, Awareness reach 2 billion by 2030 …the growth conferences, expos, online fastest growing consumer networking and media segment in the world Major • Recognition as engine of • ..role in advancing agriculture and Technological growth…many initiatives at Drivers Economics the food industry…ıncrease in development govt and corporate level to processed food…mechanical tape into the market slaughter …stunting…lab testing • lead to use of tech to convert arid • Formulation and adoption of Legal Food land into agricultural legislative framework in many framework security land….overseas investment in countries over the past decade agrıculture production and manufacturing companies Source: From niche to mainstream – Halal Goes Global 10

Halal Food in OIC Countries: Key Issues Unification of Standards and Certification Halal Food Authentication Unveiling the Potential of Islamic Finance

Halal Food in OIC Countries: Key Issues EXISISTING REGULATORY ARRANGEMENTS Complex and diverse situation…..with a wide range of existing mechanisms across the OIC • countries and elsewhere; There are over 120 Halal certifying bodies across the world ….following a multitude of • standards and procedures…. Among the 57 OIC MCs…only 5 have official Halal certification bodies , less than half have • Halal import regulations while non has a domestic halal act ! (any update) Silver lining……National Halal certification procedures have been developed by Malaysia, • Indonesia, Iran, Pakistan, UAE, Turkey Many initiatives on Halal certification in non-OIC countries like Thailand, USA, Canada, • Brazil, UK and EU Lack of unıfied regulatory framework leads to CONFUSION ! 12

Halal Food in OIC Countries: Key Issues STANDARDS AND CERTIFICATION OIC trying to realize a unıfied regulatory framework….through harmonization of Halal • Standards, Accreditation and Certification …. ..a long timeline of activities during the last three decades…. Standardization Expert Group • established in 1985 …10 th meetıng of SEG finalized and adopted three documents in 2009 Standards and Metrology Institute for the Islamic Countries(SMIIC) established in May • 2010 with a mandate to achieve the harmonization of standards among the member countries and for preparation of new ones; SMIIC aims at achieving uniformity in metrology, laboratory testing and standardization • activities among OIC countries through ensuring education and training and providing technical assistance to the members in the domain of standardization and metrology. Currently, 30 OIC countries and two observers are members of SMIIC • 13